Inkaholiks Luxury Tattoos Georgia, LLC v. James Calvin Parton, III

• Court: Court of Appeals of Georgia
• Decided: November 15, 2013
• Docket: A13A1528
• Status: Published

Opinion

THIRD DIVISION ANDREWS, P. J., DILLARD and MCMILLIAN, JJ.

NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. http://www.gaappeals.us/rules/

November 15, 2013

In the Court of Appeals of Georgia A13A1528. INKAHOLIKS LUXURY TATTOOS GEORGIA, LLC et al. v. PARTON et al.

ANDREWS, Presiding Judge.

James Parton and Inkaholics, LLC (Parton’s tattoo studio) sued Inkaholiks

Luxury Tattoos Georgia, LLC and its owner, Uchechukwu Nwaneri, alleging trade

name infringement. The suit alleged that the plaintiffs had protected rights in the

name Inkaholics for their tattoo business, which operated in the metro Atlanta area,

and that the defendants subsequently infringed on the name and damaged the

plaintiffs’ business by using a confusingly similar name, Inkaholiks, to establish a

competing tattoo business in the same area. The plaintiffs sought to permanently

enjoin the defendants from using the name Inkaholiks, and the award of damages,

under three counts based on the Uniform Deceptive Trade Practices Act (UDTPA) (OCGA § 10-1-370 et seq.); the Fair Business Practices Act (FBPA) (OCGA § 10-1-

390); and the trademark infringement law at OCGA § 10-1-440 et seq.

The defendants appeal from the trial court’s pre-trial order granting the

plaintiffs an interlocutory injunction which, pending final resolution of the case,

enjoined the defendants from using the name Inkaholiks. We find under the

circumstances of this case that the trial court did not abuse its discretion and affirm

to the extent the court granted the interlocutory injunction for the metro Atlanta area

in which evidence showed the plaintiffs operated their business. To the extent the

court granted the interlocutory injunction beyond the metro Atlanta area in which the

plaintiffs business operates, we find no basis for the injunction and reverse.

1. Trademarks and trade names are protected from infringement in Georgia by

statute and common law. Eckles v. Atlanta Technology Group, Inc., 267 Ga. 801 (485

SE2d 22) (1997); Giant Mart Corp. v. Giant Discount Foods, Inc., 247 Ga. 775 (279

SE2d 683) (1981). In count 1 of the complaint, the plaintiffs allege infringement

under the UDTPA. The UDTPA provides for injunctive relief to prevent damage

caused by a deceptive trade practice, including the use of a confusingly similar trade

name which infringes on a protected trade name. Future Professionals, Inc. v. Darby,

266 Ga. 690 (470 SE2d 644) (1996). Relief may be obtained from the deceptive

2 practice, whether or not the protected trade name was registered, and without proof

that the alleged infringer intended to deceive the public by causing confusion. Id.;

Eckles, 267 Ga. at 802. In count 2 of the complaint, the plaintiffs allege infringement

under the FBPA. The FBPA protects businesses from unfair or deceptive practices in

the conduct of trade or commerce, including passing off goods or services as those

of another, or causing actual confusion as to the source, sponsorship, approval, or

certification of goods or services, and provides for damages and injunctive relief.

OCGA §§ 10-1-393 (b) (1), (2); 10-1-399 (a). Thus, the FBPA broadly protects

against infringement on a protected trade name by use of a confusingly similar name.

See Isbell v. Credit Nation Lending Service, LLC, 319 Ga. App. 19, 30 (735 SE2d 46)

(2012). Finally, in count 3 of the complaint, the plaintiffs allege infringement under

OCGA § 10-1-440 et seq. Trademarks1 and trade names registered with the Georgia

Secretary of State are protected under OCGA § 10-1-440 et seq. from infringement

by use of confusingly similar names, and actions may be brought seeking the award

of damages and injunctive relief. Diedrich v. Miller & Meier &c., Inc., 254 Ga. 734,

1 A “[t]rademark means any word, name, symbol, or device or any combination thereof adopted and used by a person to identify goods made or sold by him and to distinguish them from goods made or sold by others.” OCGA § 10-1-440 (5).

3 736 (334 SE2d 308) (1985); Giant Mart, 247 Ga. at 775-777; OCGA §§ 10-1-450;

10-1-451.

To obtain the relief sought on the trade name infringement claim, the initial

issue under all three counts asserted by the plaintiffs is whether they had a protected

right in the name Inkaholics. Future Professionals, 266 Ga. 690; Eckles, 267 Ga. 801;

Giant Mart, 247 Ga. 775. To prove a protected right in the name, the plaintiffs would

be required to show: (1) that the name was so original or inherently distinctive that

they had the prior exclusive right to use it, or (2) if the name was not original or

inherently distinctive, it was a descriptive name in which they were the first to

achieve “secondary meaning” in the metro Atlanta area in which the plaintiffs’

business operates. Id. at 776. “A trademark or trade name composed of generic or

descriptive words is incapable of exclusive appropriation,” unless it has acquired

additional “secondary meaning.” Alexie, Inc. v. Old South Bottle Shop Corp., 179 Ga.

App. 190, 191 (345 SE2d 875) (1986). When a business entity’s use of merely

descriptive words as a trade name “causes the public to understand that the goods or

services of that business entity are designated thereby, then those words do acquire

a secondary meaning which is protected under the law.” Eckles, 267 Ga. at 802; Giant

Mart Corp., 247 Ga. at 776.

4 After a hearing on the plaintiffs’ motion for injunctive relief, the trial court

granted an interlocutory injunction finding that the plaintiffs presented evidence

showing:2 (1) that the plaintiffs had a legally protected right in the descriptive name

Inkaholics (which was registered in Georgia) by evidence tending to show that they

were the first to achieve secondary meaning in the name Inkaholics in the metro

Atlanta area – and did so before the defendants commenced use of the name

Inkaholiks in that area;3 and (2) that the defendants’ subsequent use of the similar

name Inkaholiks in the same area infringed on the plaintiffs’ trade name by causing

2 Findings of fact made in the trial court’s order granting an interlocutory injunction “are not final and are not conclusive between the parties on the final trial.” Miami Valley Fruit Farm, Inc. v. Southern Orchard Supply Co., 214 Ga. App. 624, 626 (448 SE2d 482) (1994). 3 In determining priority of ownership of a trade name which requires secondary meaning for protection, the majority rule is not who used the trademark or trade name first chronologically; rather, “the senior user must prove the existence of secondary meaning in its mark at the time and place that the junior user first began use of that mark . . . If the senior user cannot prove that its mark possessed secondary meaning at the time defendant commenced its use [or commenced use of a mark alleged to be confusingly similar], there can be no infringement, for if there was no secondary meaning, there was no likelihood of confusion when the junior user arrived on the scene.” J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 16:34 (4th ed.). Moreover, where the mark requires secondary meaning for protection, the senior user’s rights in the mark are restricted to the trade area where the mark achieved secondary meaning. Id. at § 26:25.

5 the tattoo-buying public in the area to confuse the defendants’ services for the

plaintiffs’ services.

In support of their petition for injunctive relief, the plaintiffs presented sworn

evidence showing the following: The plaintiffs have continuously used the trade

name Inkaholics in the metro Atlanta area since August 2008 when they incorporated

Inkaholics, LLC, started their tattoo business under that name, and later registered the

name in Georgia. Beginning in 2008 and 2009, the plaintiffs advertised Inkaholics as

their tattoo business in the metro Atlanta area on radio and television and through

community fund raisers. The plaintiffs provided evidence that, pursuant to these

efforts and the continuous operation of the plaintiffs’ tattoo business since 2008,

members of the tattoo-buying public in the metro Atlanta area, and a well-known

tattoo business competitor in the area, have since 2008 come to associate the name

Inkaholics with the tattoo services provided by the plaintiffs. The plaintiffs further

showed that the defendants first used the trade name Inkaholiks in the metro Atlanta

area starting in November 2011 when they incorporated their tattoo business in the

name Inkaholiks Luxury Tattoos Georgia, LLC. The defendants subsequently

advertised their tattoo business in the metro Atlanta area by radio and other methods

using the abbreviated name Inkaholiks – a name similar in appearance and

6 phonetically indistinguishable from the plaintiffs’ name Inkaholics. The plaintiffs

also produced evidence showing that, because the defendants’ name Inkaholiks is

similar looking and sounding to the plaintiffs’ name Inkaholics, members of the

tattoo-buying public have confused the defendants’ services for the plaintiffs’

services. The defendants filed sworn evidence, also considered by the trial court,

showing that members of the tattoo-buying public in the metro Atlanta area associate

the name Inkaholiks with the tattoo services provided by the defendants.

“[T]he grant or denial of an interlocutory injunction rests in the sound

discretion of the trial judge according to the circumstances of each case.” Zant v.

Dick, 249 Ga. 799 (294 SE2d 508) (1982). “The purpose for granting interlocutory

injunctions is to preserve the status quo, as well as balance the conveniences of the

parties, pending a final adjudication of the case.” Grossi Consulting, LLC v. Sterling

Currency Group, LLC, 290 Ga. 386, 388 (722 SE2d 44) (2012). Based on the

evidence presented by the plaintiffs showing they had achieved secondary meaning

in the name Inkaholics in the metro Atlanta area before the defendants commenced

using the similar name Inkaholiks in that area (and evidence of resulting confusion),

we cannot find it was an abuse of the trial court’s discretion to grant an interlocutory

injunction protecting the plaintiffs’ trade name, pending final adjudication, to the

7 extent the interlocutory injunction was limited to the metro Atlanta area. Multiple

Listing Service, Inc. v. Metropolitan Multi-List, Inc., 223 Ga. 837, 841-843 (159 SE2d

52) (1968); Bijou Salon & Spa, LLC v. Kensington Enterprises, Inc., 283 Ga. App.

857, 860 (643 SE2d 531) (2007) (although not controlling, trial court may consider

merits of the case in balancing the equities in favor of temporary injunctive relief).

The evidence showed that metro Atlanta was the trade area in which the plaintiffs

achieved secondary meaning in the name Inkaholics and the right to protection of the

name in that area. Accordingly, to the extent the injunction protecting the plaintiffs’

trade name extended beyond the metro Atlanta area, the trial court abused its

discretion and we reverse. We find no merit in the defendants’ contention that the

trial court failed to properly balance the equities in granting the injunctive relief.

2. The defendants contend that the trial court erred by finding that their

Answers and Defenses were not verified, and therefore the court erroneously failed

to consider statements of fact set forth in their Answer and Defenses. The record

shows that the defendants’ Answer and Defenses, filed unverified on October, 26,

2012, was later verified by sworn verifications dated December 14, 2012, filed a

couple of weeks before the court’s February 21, 2013 order granting the interlocutory

injunction. Even if the court should have considered the later verified Answers and

8 Defenses, that pleading admits that the defendants first used the trade name

Inkaholiks in the metro Atlanta area in 2011, and contains no other statement of fact

which would have required denial of the motion for an interlocutory injunction. Any

error was harmless. On January 28, 2013, the defendants filed their unverified

Amended Answer and Counterclaims, which incorporated and re-alleged the original

Answer and Defenses and amended by setting forth Counterclaims. Contrary to the

defendants’ contention, the record shows that the Counterclaims filed on January 28,

2013, were not verified.

3. There is no merit to the defendants’ claim that the trial court erred because

the interlocutory injunction enjoining the defendants from using the name Inkaholiks

fails to maintain the status quo by allowing the defendants to continue their existing

use of that name. In a trademark infringement case, the status quo to be preserved by

an interlocutory injunction “is not the situation of contested rights, but the last,

peaceable, noncontested status of the parties . . . [In other words,] the situation prior

to the time the junior user began use of its contested mark.” J. Thomas McCarthy,

McCarthy on Trademarks and Unfair Competition § 30:50 (4th ed.).

9 4. Citing only to allegations in their unverified counterclaims,4 the defendants

contend that, even if the plaintiffs can prove that they achieved secondary meaning

in the name Inkaholics in the metro Atlanta area prior to the time that the defendants

commenced use of the trade name Inkaholiks in that area, the plaintiffs are still not

entitled to an interlocutory injunction because: (1) the defendants own common law

trademark rights in the name Inkaholics, which have been continuously in use in

interstate commerce outside Georgia since 1997; and (2) the defendants own federally

registered marks in the name of “Inkaholics.com,” registered on November 8, 2011,

and “Inkaholiks,” registered on January 29, 2013. Based on these allegations, the

defendants contend that they have superior rights to use of those marks under the

Federal Trademark Act (15 USC § 1051 et seq., also known as the Lanham Act.).

In the absence of a verified counterclaim or any sworn facts in the record to

establish a factual basis for this argument, we find no error in the trial court’s refusal

to deny interlocutory injunctive relief on this basis. But even assuming that these facts

could be established, there is no evidence that, when the plaintiffs first used the name

Inkaholics in the metro Atlanta area in 2008, they had actual knowledge of the

4 We render no opinion on whether the defendants have properly asserted their counterclaims in this case. See OCGA § 9-11-13; Baitcher v. Louis R. Clerico Assoc., 132 Ga. App. 219, 221 (207 SE2d 698) (1974).

10 defendants’ prior use of the name Inkaholiks outside of Georgia. In that case, the

plaintiffs would be entitled to a “limited area” defense under 15 USC § 1115 (b)

which would: (1) allow the plaintiffs to use the name Inkaholics in the metro Atlanta

area if evidence showed they continuously used the name and achieved secondary

meaning prior to the defendants’ federal registration, and (2) enjoin the defendants

from infringing on the plaintiffs’ mark in that area. Burger King of Fla., Inc. v. Hoots,

403 F2d 904 (7th Cir. 1968); McCarthy, supra at § 26:43 to 26:45. Even considering

the allegations in the defendants’ counterclaims, the trial court did not err in granting

the interlocutory injunction to the plaintiffs for the metro Atlanta area.

Judgment affirmed in part and reversed in part. Dillard and McMillian, JJ.,

concur.